3 key areas that will drive growth in India’s logistics sector in 2019

Published: January 12, 2019 4:29 PM

Indian logistics sector is presently estimated to be worth around $160 billion and is poised to grow phenomenally over the next two years and reach a size of $215 billion by 2020.

2019 will pan out for the Indian Logistics sector on the back of sustained policy reforms, infrastructure development and new technology adoption.

By Deepal Shah

Indian logistics sector is presently estimated to be worth around $160 billion and is poised to grow phenomenally over the next two years and reach a size of $215 billion by 2020. Here are the three areas for creating a sustainable roadmap for the growth of the logistics sector in 2019.

Infrastructure enablement

The government has reiterated its steadfast commitment to modernizing the functionalities of Indian logistics with a key focus on infrastructure development. With a view to improving supply chain efficiencies and enhancing connectivity to help logistics players tap the underleveraged markets in the country’s hinterlands, key infrastructure development projects have been rolled out.

The ambitious Bharatmala project holds the promise of strengthening the countrywide road network and improving connectivity with the interior and backward areas of the country. The Sagarmala initiative is a key step in doubling India’s coastal shipping share in the country’s broader modal mix and aims at formulating a comprehensive shipping policy and optimizing the country’s maritime assets. It places heavy emphasis on improving maritime linkages and promoting port-led industrial development by setting up industrial clusters and manufacturing hubs along coastal zones.

The high-speed, freight-only Dedicated Freight Corridor Project aims at decongesting a heavily saturated road network and reducing freight transit times from industrial heartlands in north India to ports on the eastern and western coast of the country. Optimizing freight transport times, the dedicated corridor initiative will promote economic growth and generate employment through the setting up of industrial corridors and logistics parks along the corridor routes.

Regulatory boost

Key reform measures and policy interventions like the unveiling of the Goods and Services Tax, (GST), relaxed FDI regulations and granting of infra status has boosted the core competencies of the Indian logistics industry. GST was a game-changer for Indian logistics. It laid the foundation for the setting up of large format multi-modal logistics parks along key consumption and industrial centres which can function as freight aggregation and distribution hubs.

The ongoing trade war between the US and China presents India with the key opportunity to expand its export trade and correct its trade imbalances with the Asian economic powerhouse. The development has provided India with the advantage of gaining an upper hand in renegotiating the terms of economic engagement with its regional neighbour. This is an opportune time for India to improve trade relations and economic cooperation with China and gain inroads into its vast consumption-led economy.

Deeptech leverage

The emergence of new-age empowering technologies like artificial intelligence, internet of things, and machine learning will disrupt the conventional workings of the country’s logistics sector. The impact of these technologies is anticipated to enhance productivity across the supply chain spectrum and streamline operational processes. These technologies will largely play an enabling role in boosting efficiencies of supply networks, reduce wastages and lead to supply chain optimization.

The speed and scale with which we align our supply chain strategies to tackle the complexities of a changing global trade order will be key to determining our position in the global logistics ranking.

(Deepal Shah is the CEO – Custom Clearance and Freight Forwarding at Avvashya CCI Logistics. Views are the author’s own.)